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Fiat's Olympics sponsorship might boost image

/ Source: The Associated Press

No sooner had the 2006 Winter Games been awarded to Turin seven years ago than they were nicknamed the "Agnelli Olympics" — a sign of the influence in and around the host city of the family that controls Fiat.

Now that the Games are just around the corner, Fiat SpA is coming off encouraging figures after years of declining fortunes. It will gain massive exposure during the Olympics thanks to a $48 million worth sponsorship deal that analysts say may boost the company's lackluster image.

"What better occasion to brush up the Fiat brand than an international event taking place in the company's own hometown?" said Franco Di Dio Magri, marketing professor at Rome's La Sapienza University. "Fiat wants to project an image of a healthy company, capable of keeping up with the times."

Just like Detroit automakers General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group played a big role in Super Bowl XL in the Motor City, Fiat has spared no effort in the Feb 10-26 Games. It supplies vehicles for the games, sponsors athletes, hosts cultural events.

Raffaello Porro, head of corporate communications of Fiat Auto, said "Fiat's presence is underlined by the appealing, positive values that the brand wishes to convey."

Italy's biggest private-sector employer, Fiat has been a symbol of post-World War II reconstruction for decades: generations of Italians have owned its compact city cars and been fascinated by the jet-setting life of longtime chairman Gianni Agnelli, who died in 2003.

But recent years tell a different story: a deep crisis that saw Fiat's auto unit lose more than 1 billion euros in 2002 as its brand lost appeal across Europe, developing a reputation for poor quality and frequent repair.

In October, the company suffered an embarrassing blow when the head of the auto division's brand promotion was rushed to the hospital from the apartment of a transvestite, for what doctors said was a drug overdose.

Lapo Elkann, grandson of Gianni Agnelli, was dismissed from the hospital after a little over a week, and has been out of the spotlight since.

This week, however, Fiat's turnaround strategy — focused on the auto business, the sale of noncore interests and development of research and innovation in an effort to snag consumers with new models — started to pay off.

In results released Monday, Fiat posted a fourth-quarter profit of $46.3 million and a net profit for the full 2005 for the first time since 2000. The quarterly profit compared with a loss of 550 million euros in the same quarter a year earlier.

The performance, largely due to gains from asset sales and progress in the auto division, earned the company cautious praise from industry analysts. The closely watched Fiat Auto unit posted a fourth-quarter profit of $25.6 million, compared with a loss of $189.9 million in the same quarter a year ago.

Fiat also saw its Italian market share increase in January to 30.8 percent from 29.4 percent in December.

The company's ties to the Olympics run deep.

The Agnelli family founded Sestriere, the main Alpine ski venue for the Olympics, back in the 1930s; and the late Gianni Agnelli was a discreet yet powerful force behind Turin's successful bid. The overall cost of the Turin Games is estimated at more than $3.6 billion.

Fiat is one of the main national sponsors at the Games, along with bank San Paolo and telecommunications giant Telecom Italia. There are also "Worldwide Partners" — such as Visa International, Coca Cola Co. and McDonald's Corp. — sponsoring an entire Olympic cycle of one Summer and one Winter Games.

Fiat's Olympic sponsorship consists largely of supplying cars — 3,000 of them — to the Olympic family of athletes, journalists and reporters.

Among them is the new Fiat Sedici, a 4X4 offroader that will go on the market in March. Some of the vehicles are provided by Fiat's upmarket brands Alfa Romeo and Lancia, while the Iveco truck division supplies some 1,200 buses.

Different brands are associated with different events and athletes: Fiat sponsors members of the Italian freestyle skiing team, for example, while Lancia supports the Italian figure skating team.

Cultural initiatives include the exhibit "Landscape and View from Poussin to Canaletto," on display at the Pinacoteca Giovanni e Marella Agnelli, which runs until May 14; and a special opening of the Fiat Historical Center, which features original models of some of Fiat's most famous cars, such as the Cinquecento, until March 26.

Analysts said it would be difficult to quantify the economic returns of Fiat's sponsorship deal. But some noted it might help enhance the sense of turnaround, and even improve relations with the company's workers.

"It can have an effect not only on sales, but also on the involvement of employees," said Emanuele Invernizzi, a professor of corporate communications at Milan's IULM university. "If your boss is someone you respect you work with more pleasure and this increases productivity," he said.